The perils of lenders/condos/foreclosures and...

[Imakeholesinu]

...future home ownership.

I've been looking at purchasing a home for about a year now, but since the banks tanked and people are getting foreclosed on left and right I wanted to see if I could get in on the action.

I found a place close to where I live. It needs a little finishing but other than that it is great. The problem I'm having is that the lender won't be able to secure me financing since it is a condo in a 4 unit building where two of the units are in rehab and one is in a short sale and the unit I want is in foreclosure. Apparently the main sticking point is that Freddie and Fannie both want an association to exist on a condo before purchasing it. Since there is no association since no one lives there then securing the loan is next to impossible from the two big lenders. I'm going to look at local banks who write their own and hold their own paper and don't do the selling and buying of loans like Freddie and Fannie do to see if I can get financing but it seems like this may not work. Anyone have any suggestions or am I stuck between a rock and a hard place when it comes to coming up with the financing?

[Zeus]

In the past, the simple rule of obtaining financing from the banks has been you first have to prove you don't need the money before they will give it to you. At least that was the case up here.

It's a little different when it comes to homes, though, as your recent housing crisis indicates. The banks are wary to a degree but there are ways to get around it. First thing you can do to take their panties out of a knot (I hope my severe disdain for the banking institutions is coming through nicely) is to put a significant down-payment down. 10% at least but 20% if you can afford it. Of course, this usually means getting another loan somewhere else or dipping into your savings (up here in Canada you can take out of your RRSPs to help out) but often it's required so the banks don't have a panic attack. Most other methods - in particular the house-value-as-collateral one - will likely not be accepted during this volatile period. Cash is king and you're gonna need some.

But the other issue here is something you may not be able to overcome. I'm not sure what the laws are in the US (Flip can help), but in Canada, all condo complexes must have a very specified condo corporation that oversees the condo's finances (ie. the use and distribution of the condo fees that you pay). I will assume for a moment that Canada copied the US laws and that they're relatively similar. If so, the issue your bank might be having is that the condo corporation, which sounds like it's only 4 condos large, is basically non-existent at the moment due to the status' of the other units. It may legally be around still but in reality, there's nothing to enforce if there isn't stable ownership of the units. If that is the case, you can't do anything about it. The bank is basically saying "the proper legal structure needs to be in place before we will risk a mortgage on this property". You'll just have to wait for things to sort themselves out.

Flip should weigh in on this, though, as I am not really familiar with your condo rules. I'm just assuming they're similar to ours.

[Mental]

Since the subprime crisis, banks have as far as I know been in this weird schizophrenic place between being ridiculously desperate to unload thousands and thousands of properties they're sitting on, and being terrified that you're going to become another subprime loan yourself.

I know someone who bought a house within the last year, but this person paid cash, so that's not really anything you can probably draw experience from. But I can say that my sense was that the eagerness to unload property before it rots or gets eaten by termites slightly trumps the subprime atmosphere of paranoia. In other words, if you stick with it there may be a way to get them to deal with you.

I do agree with Zeus, though - you should not even consider property ownership unless you can put down at least 10%. If you can't afford to do that, you're setting yourself up for the potential of a pretty heavy financial burden, one that's not worth the risk (assuming you could even find someone to give you a loan without the 10%, which would probably be tough given how afraid the banks still are of defaults).

[Imakeholesinu]

That's the thing Replay/Zeus. I will have the money as a forgivable loan that will cover 20% of the value of the property up to $14,999. Stipulations on this loan are that I need to stay in the home for 5 years then that 20% turns into equity.

After pining over this all last night and this morning, the property I'm looking at I've completely fallen out of love with. Strikes against it are:
1) I would be the only person in the unit thus responsible for any/all maintenance to the property until the other units are sold.
2) No off-street parking (One bar and one restaurant on the opposite corners of one another).
3) No basement storage (well, that was secured anyway, I'd have to fix it up).
4) Possibility of condemnation. The other two units in the building are unoccupied and perhaps bank owned (I know at least one is). They look like they are being rehabbed or the copper thieves got to them since there are large holes in the drywall from what I can see in the windows and as the one bank owned does have a lock box on it but I can't access it because it isn't listed anywhere and my agent can't find it. If those two units do sit idle and nothing is done to repair them and something catastrophic were to happen, the whole building could be condemned. The unit below is a short sale also and they are asking too much for it. If I could buy the whole building for $140,000 I'd do it in heart beat and rehab the other units and turn it into a rental property.

The main reason why I liked the property so much was because it was in fairly good condition, had new appliances and an amazing master suite bathroom. The assessor's office had two of the units owned by people but one was the short sale and the other surely has been foreclosed on as well. So the entire building pretty much is in a state of foreclosure.


Now I'm looking at other properties, single family dwellings or condo units that are association run.

What I don't get is that if Banks are in trouble and need to get rid of these 'toxic' properties, why the fuck don't they make it easier to get a list of foreclosures?

[Zeus]

You're not a part of the old-boy's club, you ain't privy to such info.

It's probably a good idea you pass on this one. When it comes to condos, you gotta make sure you have a good condo corp and good people taking care of it.

[Imakeholesinu]

You're not a part of the old-boy's club, you ain't privy to such info.

It's probably a good idea you pass on this one. When it comes to condos, you gotta make sure you have a good condo corp and good people taking care of it.

Yeah, I am passing on it. I've found 4 other properties today that I want to look at, plus the two that I found last night and the 2 that I went and looked at on Saturday. I've got a lot of options.

[Zeus]

You're not a part of the old-boy's club, you ain't privy to such info.

It's probably a good idea you pass on this one. When it comes to condos, you gotta make sure you have a good condo corp and good people taking care of it.

Yeah, I am passing on it. I've found 4 other properties today that I want to look at, plus the two that I found last night and the 2 that I went and looked at on Saturday. I've got a lot of options.

Seems like a lot of people down there have lots of options when it comes to buying a home. My city is the opposite, housing market actually went UP in 2008

[Mental]

Banks make shitty realtors.

I was driving to Fry's the other day and I passed one of those subdivisions they started building back in 2007 before shit started to fall apart...God, that was scary. It was like Waiting For Godot, just nobody around, a massive development, and on the other side - boom, empty desert. Not even, like, a partially done lot, just fucking wasteland.

I remember thinking, "I would be SO SAD if I had to live here every day."

[Flip]

Im glad you moved on so i dont have to look up condo association rules.

What sturck me as extremely odd, though, was that a 4 unit place was structured as a condo... thats seems crazy! I remember when i owned a condo in a place with 100 or so units and my monthly payment was 200+ to the association for yard work, trash, outside unit care, snow removal, and landscaping. I cant imagine what each person would have to pay a month in a 4 unit building. If the roof needed repair it would be costly as shit that noone would want to cough up for. If you were the president of that association it would be like pulling teeth to get some of the tenants to pay their monthly dues/give a shit about the building in general.

Its a buyers market, you can find something sweet as shit that wont bang you in the ass if you keep looking. Plus, if you havnt owned in 3 years you get the 8k credit on your 2009 taxes. Which is the best fucking thing i have ever seen.

[Mental]

My friend owns a sweet condo in the Bay Area, one of the nicest little condos I've seen (like a tiny two-story cottage).

As far as I could tell when I was renting from him there the only thing that regularly raped him was the association with fees and sudden payments, he got hit with some plumbing thing for three grand within two months of moving in. Luckily he could afford it.

[Zeus]

Its a buyers market, you can find something sweet as shit that wont bang you in the ass if you keep looking. Plus, if you havnt owned in 3 years you get the 8k credit on your 2009 taxes. Which is the best fucking thing i have ever seen.

What? That's unreal, that's what they're doing to get people to buy homes down there? And that's a credit not a deduction?

[Flip]

Its a buyers market, you can find something sweet as shit that wont bang you in the ass if you keep looking. Plus, if you havnt owned in 3 years you get the 8k credit on your 2009 taxes. Which is the best fucking thing i have ever seen.

What? That's unreal, that's what they're doing to get people to buy homes down there? And that's a credit not a deduction?

Yeah, just a big honking CREDIT at the end of the day. Last year there was a 7k one, but it needed to be paid back in $500 increments on future returns (so it was essentially an interest free loan), but this year its 8k and non-returnpaybackable. Thats not really a word, but it fits. You need to be a first time buyer or not owned in the last 3 years, though.

"Thanks for buying a house, here is 8 grand for your bank account."

[Zeus]

Its a buyers market, you can find something sweet as shit that wont bang you in the ass if you keep looking. Plus, if you havnt owned in 3 years you get the 8k credit on your 2009 taxes. Which is the best fucking thing i have ever seen.

What? That's unreal, that's what they're doing to get people to buy homes down there? And that's a credit not a deduction?

Yeah, just a big honking CREDIT at the end of the day. Last year there was a 7k one, but it needed to be paid back in $500 increments on future returns (so it was essentially an interest free loan), but this year its 8k and non-returnpaybackable. Thats not really a word, but it fits. You need to be a first time buyer or not owned in the last 3 years, though.

"Thanks for buying a house, here is 8 grand for your bank account."

Still, man, $8k in your pocket? For a young couple looking to get their first home or a family looking to move back into a home after having to downgrade to an apartment, that's huge. Especially with the housing market as depressed as it is, that $8k is often going to be enough to cover or nearly cover the 10% downpayment we were discussing earlier. That's amazing. If you're a yuppie with a solid job, that's awesome news.

[Imakeholesinu]

What? That's unreal, that's what they're doing to get people to buy homes down there? And that's a credit not a deduction?

Yeah, just a big honking CREDIT at the end of the day. Last year there was a 7k one, but it needed to be paid back in $500 increments on future returns (so it was essentially an interest free loan), but this year its 8k and non-returnpaybackable. Thats not really a word, but it fits. You need to be a first time buyer or not owned in the last 3 years, though.

"Thanks for buying a house, here is 8 grand for your bank account."

Still, man, $8k in your pocket? For a young couple looking to get their first home or a family looking to move back into a home after having to downgrade to an apartment, that's huge. Especially with the housing market as depressed as it is, that $8k is often going to be enough to cover or nearly cover the 10% downpayment we were discussing earlier. That's amazing. If you're a yuppie with a solid job, that's awesome news.

What makes the deal even sweeter for a Missouri resident like me is that the state will give me 6750 of that up front for downpayment and closing costs. Then when I get the rest from the fed I need to pay back that amount by June 2010. So I still get 1250 in my pocket.

[Zeus]

You lucky fucks. I only wish I had an opportunity like that when I was buying my home 4 years ago.

[Flip]

What makes the deal even sweeter for a Missouri resident like me is that the state will give me 6750 of that up front for downpayment and closing costs. Then when I get the rest from the fed I need to pay back that amount by June 2010. So I still get 1250 in my pocket.

Yeah that was a problem that the IRS was trying to figure out... how to get the money to the taxpayer sooner so they could use it for the downpayment. As it is, you need to buy the house, file a return, then you get the money... which doesnt help with the downpayment at all. Good for the states to jump in with their own plan.

[Mental]

You lucky fucks. I only wish I had an opportunity like that when I was buying my home 4 years ago.

God Bless Uncle Sam and B-Rock, I guess.

[Imakeholesinu]

You lucky fucks. I only wish I had an opportunity like that when I was buying my home 4 years ago.

Move from Candyland.

[Zeus]

You lucky fucks. I only wish I had an opportunity like that when I was buying my home 4 years ago.

Move from Candyland.

No chance. Much better up here

[SineSwiper]

You lucky fucks. I only wish I had an opportunity like that when I was buying my home 4 years ago.

I wish I bought my Prius this year, too. Didn't get a credit for buying it last year. Could have got it in 2007 (I think), no credit in 2008, could have gotten it in 2009.

[Flip]

You lucky fucks. I only wish I had an opportunity like that when I was buying my home 4 years ago.

I wish I bought my Prius this year, too. Didn't get a credit for buying it last year. Could have got it in 2007 (I think), no credit in 2008, could have gotten it in 2009.

I think Prius's may still not be on the list of cars that qualify for the credit. I thought it phased out after 60,000 were sold or something and the pruis was super popular and was phased out by 2008. There are new models that qualify for 2009 like that Volt. Maybe that got changed, i havent read up on 2009 stuff yet...

I do know you can deduct sales tax on a car in 2009, but thats any car. It will be above the line (so not as good as a credit) but it wont be apart of the itemization SCH A like it used to be, so standard deduction filers will be able to take advantage of it.

[Imakeholesinu]

Found a house. Contract time.

[Imakeholesinu]

Fail. Fannie mae sucks cock.

[Zeus]

Fail. Fannie mae sucks cock.

? A little more detail would be nice

[Imakeholesinu]

Fail. Fannie mae sucks cock.

? A little more detail would be nice

In order for me to get my $14,999 I need to prove the house I want to buy has been vacant for 12 months. The bank took over the title to the house in March (3 months ago). So I can't buy the house because it doesn't meet the bank's 12 month ratio. I can possibly possibly prove that the home was vacant for 12 months by calling the electric company and inquiring on when the last time the last owner of the property paid their electric bill. I'm guessing it was sometime last year (late 08) because the pipes in the house had burst because water froze inside them because the property had not been winterized which meant the house was vacant/abandoned pre-foreclosure. If I can prove it was longer than 12 months, I might be able to buy the house.

So yeah, they give us money but make us jump through flaming hoops and dodge tigers, lions, bears, guns and ninjas to fucking get it.

[SineSwiper]

What the fuck does vacancy have anything to do with it? If it was 2 months, who cares?

[Zeus]

I'd spend 10 minutes making the phone call. Other than that, let the bank keep it's money just sitting there doing nothing. It's their loss

[Imakeholesinu]

What the fuck does vacancy have anything to do with it? If it was 2 months, who cares?

I wish I could tell you. This is absolute horseshit if I can't get that house.

[Imakeholesinu]

Ok, so I didn't understand the website. That rule only applies if the property was a rental which this one I'm 90% sure was not. So I'm still good to go on this one. Looking at Mortgage insurance.

[Imakeholesinu]

They are countering my first offer.

[SineSwiper]

They are countering my first offer.

Did you riposte?

[Imakeholesinu]

They are countering my first offer.

Did you riposte?

No, I didn't fart in their face.

Actually I found out today I can't even make an offer per the guidelines, luckily there is nothing in writing yet so I have to get an appraisal first because I basically have to abide by the HUD practices. I can only offer 95% of what the appraised value is at. The appraisal I'm sure will be less than what the house was listed for since someone who didn't know what they were doing appraised it as a two bed room when in reality since it doesn't have an egressed window in one of the bedrooms it cannot actually be considered a bedroom which will make it less valuable to purchase (but also to sell, which makes me think it might be a nice rental property after 5 or so years).

[Oracle]

Speaking of buying a place to live....

Waiting on a conditional on my house to go through in a day, and we put in an offer on a new place today.

[SineSwiper]

http://www.merriam-webster.com/dictionary/riposte

[Imakeholesinu]

http://www.merriam-webster.com/dictionary/riposte

No I haven't received an answer yet because I need to formally do the steps per the program guidelines before I can make an offer and begin negotiations.

[Imakeholesinu]

Now this is funny. The Bank (Fannie) has decided to RAISE the list price on the property because of the work they did to repair the damage from not winterizing the property because they drug their feet in foreclosing on it. I am literally laughing at them as they are acting as if NOTHING happened in the last 12 months. That bailout? What bailout? All those TOXIC assets, yeah we'll just hold on to them and not work with potential buyers who are getting money together from federal programs. We won't let you inspect the property also to see if you REALLY want to buy it. You just need to either buy it or not.

Fannie and Freddie should have died, just like the rest of them.

[Imakeholesinu]

I abandonded the foreclosure market and just put a contract down on a house today.